Sri Lanka may issue USD 3 billion in international sovereign bonds by 2028, according to an assumption made by the International Monetary Fund (IMF).
Speaking in parliament yesterday, Deputy Minister for Finance and Planning Dr. Anil Jayantha Fernando clarified that this was an IMF estimate and not a projection of the Sri Lankan authorities.
He said that the IMF's staff report assumes issues of USD 1.5 billion each in 2027 and 2028.
Any final decision on whether to actually tap global markets will be made by the government on a periodic basis, following a careful assessment of the prevailing situation.
Simultaneously, the Public Debt Management Office is working to strengthen the regulatory framework for liability management operations.
These efforts are designed to reduce financing, interest rate, and currency risks within the government's overall debt portfolio.
The office is currently assessing both opportune market conditions and the range of available instruments for this purpose.
Dr Fernando declined to provide details on specific operations or strategies, describing the information as highly sensitive.
Regarding official reserves, the Deputy Minister emphasised that gross official reserve figures are not defined as program targets under the IMF Extended Fund Facility.
He stated that the relevant target is the program net international reserves, which are defined in the published IMF documents.
For the end of the year, the net international reserves target has been set at USD 944 million.
Data indicates that gross official reserves reached USD 6.9 billion in August, which is equivalent to 3.4 months of import cover.
The primary driver for the build-up in gross official reserves has been Central Bank purchases of foreign exchange directly from the market, although the pace of these purchases has slowed.
Net purchases fell from USD 1.76 billion in the six months to June 2024 to USD 0.56 billion in the six months to June 2026.
Gross reserves include the People’s Bank of China swap facility.
Apart from that swap and a marginal amount of encumbered balances, the reserves are readily available for debt service payments or market intervention.
On the issue of short-term foreign currency obligations, outstanding currency swaps totalled USD 4.1 billion at the end of May 2026.
This amount includes USD 1.8 billion in international swaps and USD 2.3 billion in domestic ones.
Of the domestic swaps, only around USD 83 million are due to mature beyond one year, with the rest expected to be settled within twelve months.
Domestic swaps had previously peaked at USD 2.7 billion in August 2016.
The Central Bank expects to maintain a flexible exchange rate, only intervening to build reserves or to mitigate excessive volatility.
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